Investment Strategy
We seek to pick winning funds with superior management and quantitative characteristics linked to strong performance. Our quantitative research uses the most comprehensive mutual fund database in the world to determine the best strategies for long-term investing success. We then supplement those studies with extensive qualitative research of portfolio managers, analysts, and traders through onsite visits and follow-up phone calls.
 
About the Editor
Russel Kinnel is director of manager research for Morningstar, Inc. and editor of Morningstar FundInvestor, a monthly print newsletter for individual investors. He also writes the Fund Spy column for Morningstar.com, the company's investment Web site.

Since joining the company in 1994, Kinnel has covered the Fidelity, Janus, T. Rowe Price, and Vanguard mutual fund families. He helped develop the new Morningstar Rating for funds and the new Morningstar Style Box methodology. He also is co-author of the company's first book, The Morningstar Guide to Mutual Funds: 5-Star Strategies for Success, which was published in January 2003.

 
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About Russel Russ' Photo
Russel Kinnel,
Director of Manager Research and Editor, Morningstar FundInvestor
Russel Kinnel is director of manager research for Morningstar, Inc. and editor of Morningstar FundInvestor, a monthly print newsletter for individual investors.
Featured Posts
Going Global--Revenue and Bonds
Morningstar senior analyst Alec Lucas explored geographic diversification in a new article. Looking at country of domicile does little to describe where a company makes its money, which is why revenue exposure is an important data point to consider.

Are High-Yield Bonds Necessary?
Last week, John Rekenthaler explored the question of whether high-yield bonds were necessary in an investor's portfolio. He argues that investors can substitute for high-yield bonds by owning a mix of investment-grade bonds and large-value stocks, which, of course, many investors may already own.

An Upgrade for Dodge & Cox Global Bond
Dodge & Cox Global Bond's DODLX Morningstar Analyst Rating was recently upgraded to Silver from Bronze, driven by increased confidence in the team's foreign-exchange capabilities. This world-bond fund was launched by Dodge & Cox in 2014 and is still relatively small with $270 million in assets; it was first rated by Morningstar's analysts in 2017. It is built on the same foundations that distinguish Dodge & Cox Income DODIX: a patient and disciplined strategy, strong and experienced leadership, and attractive fees. Here is the rest of the analysis, written by senior analyst Benjamin Joseph:

"The managers invest with a three- to five-year investment horizon and employ the deep, bottom-up research that is a hallmark of the firm. The strategy's large corporate-credit stake, typically near 50% of assets, makes it unique among world-bond peers, which tend to focus more on sovereign debt. Dodge & Cox employs a team of industry, credit, and macro analysts to find the companies, sectors, and currencies that are most appropriate for this strategy's global mandate. The process leads to a concentrated portfolio with high-conviction holdings, including large allocations to emerging markets. For example, in March 2019, it had 28.4% in emerging-markets debt versus 6.5% for its benchmark, the Bloomberg Barclays Global Aggregate Index. The managers also have the flexibility to take both hedged and unhedged currency positions, but it's less aggressive on this front; some competitors invest more than half of their assets in non-U.S.-dollar-denominated securities. This strategy tends to keep its foreign-currency exposure around 20% on average.

"Despite a tough start, the fund has generated remarkable returns since inception. The strategy was hit in 2014 as oil prices slid given its energy-related holdings and owing to its euro-sensitive currency positions. Its heavy allocation to credit in 2015--double the Morningstar Category median over the year--again caused it to significantly lag peers as energy holdings struggled. However, it fared predictably well in favorable stretches for credit such as 2016 and 2017; the strategy's 2% annualized return bested close to 90% of peers and outperformed its benchmark by 109 basis points since inception."

 

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